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If you're like most small business owners, your spouse does odds and ends around the office and pitches in when you need help. This is particularly true in the summer months when other employees take vacation leave.

Strategy: Make your spouse an official employee. Pay him or her a regular salary, withhold income tax and employment taxes, deduct contributory employee expenses—the works. While it will add a few extra paperwork hassles, you should come out way ahead tax-wise.

Want specifics? Here are six good tax reasons why you should put your spouse on the payroll today:

1. Income shifting. If you're operating as a C corporation, any compensation paid to your spouse would normally be left in the corporation. As a result, if your corporation is in a higher tax bracket than your personal tax bracket, you save tax overall by paying your spouse a salary. Otherwise, there's no real tax benefit—and possibly a drawbac...(register to read more)

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{ 3 comments… read them below or add one }

Saundra July 19, 2012 at 3:02 pm

I am in the same situation and I called the office of the government that handles these only to find out that not only can’t we file a claim, but that we also shouldn’t be paying into the system. The up side is that you can do amended returns and get up to three years back. Yeah, it’s a headache, but may be worth it.


Maria February 16, 2012 at 2:30 pm

My husband owns his business (automotive repairs) and we became incorporated in 2010. I am not an officer but I am an employee of the corporation, he is also employed by the corporation and the sole officer. We are in tough times and I was laid off (so to speak) so I no longer draw a salary. Both of us and the corporation pay unemployment taxes. Can I collect unemployment benefits at this time or am I unable to because I am married to the officer of the company. Also, if we are not eligible to collect, why do we have to pay into the system that will not support us when we need it?


Sam January 19, 2012 at 3:34 pm

Good info


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